WA sues to block Kroger-Albertsons merger over competition

WASHINGTON -
In court Monday, Washington began presenting its case to block the proposed merger between Kroger — which owns QFC and Fred Meyer — and Albertsons, the parent company of Safeway and Haggen. The merger, which would create the second-largest grocery retail chain in the U.S., has sparked fears among employees, unions and state leaders.

Washington state Attorney General Bob Ferguson has taken legal action to block the merger, arguing that it would devastate competition and lead to higher prices for consumers. "This is the largest proposed supermarket merger in U.S. history, and it’s a disaster for Washington consumers," Ferguson said.

He emphasized that the combined Kroger-Albertsons entity would dominate the market, reducing competition and allowing the companies to control prices. Ferguson also pointed out that Washington is particularly vulnerable because, in many areas, these chains are the only grocery providers.

Kroger and Albertsons argue that combining forces is necessary to remain competitive against giants like Walmart and Amazon. However, union employees and state officials believe this deal will hurt competition, workers, and consumers alike.

Keep reading to learn more about the proposed merger and what it would mean for Washington grocery workers and consumers.

A history of WA mergers with fallout

This isn’t the first time the grocery industry has seen consolidation. Back in 2015, Albertsons’ acquisition of Safeway led to store closures and bankruptcy. Workers say the same pattern emerged when Rite Aid acquired Bartell Drugs, further shrinking competition and negatively impacting employees and shoppers.

Washington state leaders now argue that this latest merger could have similar consequences.

WA employees are on edge

Across the state, grocery employees — many of whom are unionized — are expressing their anxiety.

Kroger and Albertsons are two of the largest employers of union grocery labor in the country, and workers fear the merger could lead to the loss of their union benefits. James Reed, a cashier at QFC in Bellevue, voiced his concerns.

"We could lose our union status, and losing our benefits means losing our medical care, vacation time, and sick pay," said Reed. "Who knows what they will throw at us?"

Dalton Adams, also a QFC cashier, previously worked at Safeway and saw firsthand the impact of Albertsons' acquisition. "I got to see the downfall," Adams said. "If there’s no other stores to compete, it would be very bad for everybody."

Faye Guenther, president of the United Food and Commercial Workers (UFCW) union, has been a vocal critic of the merger since it was announced in Oct. 2022. Just hours after the deal was proposed, Gunther and union members expressed strong opposition, citing the potential harm to both employees and consumers.

"This merger hurts all of us," Gunther said. "Mass consolidation is not helping us, and Washington has the most to lose with 124 stores potentially being sold." Gunther also questioned the companies’ claims that they wouldn’t close stores, noting that under oath, executives admitted they might only lower prices in certain locations — prices that, according to Gunther, should have been reduced years ago.

Yasmin Usher, a longtime employee at an Albertsons store in Port Orchard, testified at the trial, sharing her fears that her store might be sold off to an unprepared company. After 25 years with the company, Usher explained how she and her fellow employees have had to fight for fair wages and benefits, going as far as staging a strike in 2013. She voiced frustration with Kroger's history of resisting union efforts. "Once workers voted to join the union, Kroger made it hard to settle on a fair contract," she said.

Usher also raised concerns about the company’s focus on profits over worker conditions and customer service. She described how investments in staffing, training, and security have been lacking, leaving workers stretched thin and customers dissatisfied.

"More investment in our stores is necessary — shorter checkout lines, better training, more security. But all of this is only possible if the company focuses more on its workers and shoppers and less on profits, she said"

Labor unions across the country, including MLK Labor, a coalition of union members in Washington, have joined the fight against the merger.

Katy, the executive secretary-teasurer of MLK Labor, emphasized the broader impact of the deal. "This merger doesn’t just hurt grocery workers. Research from Columbia University and the University of Chicago shows that in areas where large employers dominate, wages are lowered, and food deserts worsen. We need our elected officials to stand with workers and consumers, not corporate interests."

A threat to competition and prices

The Federal Trade Commission (FTC) has echoed these concerns, filing a lawsuit in February that warns the merger would stifle competition, resulting in higher prices and fewer choices for consumers. According to the FTC, less competition means grocery prices are likely to increase, and product quality could suffer.

Ferguson has also taken legal action to block the merger, emphasizing its disproportionate impact on Washingtonians. Ferguson pointed out that up to 124 stores in the state could be closed or sold as part of the deal. He cited an internal Albertsons executive’s remark: "It’s all about pricing and competition, and we all know prices will not go down."

Albertsons and Kroger's defense

Despite the outcry, Kroger and Albertsons maintain that the merger is essential to compete with companies like Costco, Amazon and Walmart. They argue that combining resources will allow them to lower prices and improve services for customers. The companies also promise that no stores will close directly due to the merger. However, several locations, as many as 413, may be sold to C&S Wholesale Grocers, a wholesaler that plans to expand into the retail sector.

In a statement, C&S expressed confidence in its ability to operate the newly acquired stores, claiming: "The purchase of these stores will enable C&S to become one of the leading grocery retailers in the U.S. We will be welcoming thousands of skilled store associates from Kroger and Albertsons to ensure these stores thrive."

WA workers remain skeptical

Despite assurances, many Washington employees remain unconvinced. Usher, expressed her unease. "They give a lot of reassurance, but it gives me little comfort," Usher said, noting that previous mergers have resulted in broken promises.

The legal battle ahead

As the trial continues, all eyes are on the judge’s upcoming decision.

If Ferguson succeeds, the merger could be blocked nationwide or, at the very least, in Washington state. The outcome could have significant ramifications for grocery workers and shoppers across the country.